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Reviewed interim results for the half year ended 30 September 2014
The Development Bank of Southern Africa
Reviewed interim results for the half year ended 30 September 2014
Preparation of this report
The Chief Financial Officer, Kameshni Naidoo CA (SA) was responsible for the
preparation of the interim results.
Basis of preparation
Accounting policies adopted and methods of computation are consistent with
those applied to the annual financial statements at 31 March 2014. The
condensed interim financial statements are prepared on the historical cost
basis except that the following assets and liabilities are stated at their
fair value: derivative financial instruments, financial instruments at fair
value through profit and loss, available-for-sale financial assets, land and
buildings, post-retirement medical benefit and funeral benefit obligations
measured at actuarial values. The interim financial statements are in
conformity with IAS 34, Interim Financial Reporting. The preparation of
interim financial statement requires management to make judgments, estimates
and assumptions that affect the application of accounting policies and
reported amounts of assets and liabilities, income and expenses. Actual
results may differ from these estimates.
Key Highlights
- Total asset growth of 6.9% from 31 March 2014
- Development bonds and loan book net growth of 12% from 31 March 2014
- Profit for the interim period R572m
- Included in profit is an unrealised foreign exchange gain amounting to R255m
- Cash flow from operations R980m
- Capital injection received from National Treasury of R800m
Six months overview
The DBSA generated a profit of R572 million, a R28 million decrease from the
profit reported as at 30 September 2013. The DBSA continues to implement its
new strategy and had a net 12% growth in development bonds and loan book
assets since 31 March 2014. Total assets grew by 6.9% from R63.8bn to
R68.2bn. Impairment charge for the interim period amounting to R389 million
(2013: R279m) is 39% above the prior comparative interim period, however
impairment as a % of gross loan book remained stable at 4.6%. The level of
impairment has decreased in comparison by 0.8% from March 2014. The National
Treasury in support of the new strategy and growth prospects provided a
capital injection of R800m during the period under review. Further injection
of R1.7bn is expected by 31 march 2015.
1
Independent Review of results by Auditors
The condensed interim financial results of DBSA for the six months ended 30
September 2014 have been reviewed by the Bank’s auditor, Nkonki Inc. In their
review report, which is available for inspection at the Company's Registered
Office, Nkonki Inc. stated that their review was conducted in accordance with
International Standard on Review Engagements 2410, Review of Interim
Information Performed by the Independent Auditor of the Entity, and have
expressed an unmodified conclusion on the condensed interim financial
statements.
Outlook
Whilst the financial position of the Bank remains strong, the DBSA expects
strong growth in development assets to continue and should this be achieved,
this will vastly improve the Bank’s developmental reach as it continues to
play a leading role in taking forward national and continental development
objectives in a financially sustainable manner.
Condensed income statement
Six months Six months
in thousands of rand ended ended
30 Sept 2014 30 Sept 2013
Reviewed Reviewed
Net interest income 1 118 596 913 713
Other income 237 387 362 814
Grants (12 530) (13 864)
Net impairment loss on financial assets (389 246) (278 723)
Personnel expenses (287 180) (260 914)
Other expenses (83 904) (84 151)
Depreciation and amortisation (11 040) (9 341)
Profit for the period 572 083 629 534
Six months Six months
ended ended
Condensed statement of comprehensive income 30 Sept 2014 30 Sept 2013
Reviewed Reviewed
Profit for the period 572 083 629 534
Other comprehensive profit/(loss) 36 083 (222)
Total comprehensive income 608 166 629 317
2
Statement of Financial Position
As at As at
30 September 31 March
in thousands of rand 2014 2014
Reviewed Audited
Assets
Cash and cash equivalents 3 247 132 4 135 667
Other receivables 125 789 145 296
Investment securities 1 812 028 2 161 341
Derivative assets held for risk management 1 284 909 1 308 325
Post-retirement medical benefits investment 61 484 63 209
Home ownership scheme loans 7 148 7 544
Equity investments 4 794 158 4 610 448
Development bonds 1 290 855 772 743
Development loans 54 804 802 50 076 235
Property and equipment 477 477 461 873
Intangible assets 79 406 82 860
Total assets 67 932 846 63 825 541
Liabilities
Other payables 750 752 813 665
Provisions 62 868 55 998
Liability for funeral benefits 3 100 3 100
Liability for post-retirement medical benefits 173 367 165 051
Funding: debt securities 32 269 341 29 216 814
Funding: lines of credit 13 244 942 13 606 441
Derivative liabilities held for risk management 119 737 63 899
Total liabilities 46 624 107 43 924 968
Equity
Share capital 200 000 200 000
Retained earnings 11 719 900 11 296 416
Permanent government funding 6 992 344 6 192 344
Revaluation reserve on land and buildings 253 487 253 487
Hedging reserve 100 805 61 958
Reserve for general loan risks 2 042 582 1 893 983
Fair value reserve (379) 2 385
Total equity 21 308 739 19 900 573
Total liabilities and equity 67 932 846 63 825 541
3
Condensed statement of changes in equity
Six months Six months
in thousands of rand ended ended
30 Sept 30 Sept
2014 2013
Reviewed Reviewed
Balance at beginning of the period 19 900 573 16 705 725
National Treasury capital injection 800 000 2 400 000
Profit/ (loss) and total comprehensive income for the
period 572 083 629 312
Net unrealized gain on cash flow hedges 38 847 -
Change in value of available for sale financial assets (2 764) -
Total equity at end of the period 21 308 739 19 735 037
Condensed statement of cash flow
Cash flows generated from operating activities 979 771 1 035 064
Cash flows used in development activities (4 652 393) (5 828 290)
Cash flows generated from investing activities 86 835 635 259
Cash flows generated from financing activities 2 664 646 4 252 896
Effect of exchange rate movement on cash balances 32 606 (126 206)
Net increase/(decrease) in cash and cash equivalents (888 535) (31 277)
Cash and cash equivalents at the beginning of the
period 4 135 667 1 252 142
Cash and cash equivalents at the end of the period 3 247 132 1 220 865
4
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